Question

what must happen to have inflation? Could hyperinflation like that of Zimbabwe explained in the video happen in the U.S.? Why or why not?

Answer 1

Rise in the general price level must happen to cause inflation .

Inflation can occur due to many reasons such as :

1. Rising prices of goods and services in the economy

2. Price rise due to increase in production costs , such as raw material and wages .

3. A surge in demand for products and services as consumers are willing to pay more for the product.

4. Increase in money supply in the economy.

Yes , hyperinflation can occur in US because of the following reasons :

1. The latest Q2 2020 budget deficit shows that its not good for the US

2. Government's expenditures have risen upto $9 trillion and receipts have dropped to $3.5 trillion

3. Ultra low interest rate policies have created a stock market and bond market at high valuation multiples , but economy is not improving much .

4. The federal government has only managed to put down businesses in more debt as deficits are rising.

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